Exporters urge BSP to allow inflation up to 5%

AN export group has urged the central bank to broaden its inflation target range to as much as 5 percent, instead of keeping it within the 2 percent to 4 percent band, to allow the economy to grow further.

Given a growing economy like that of the Philippines, “I think they [the Bangko Sentral ng Pilipinas (BSP)]should allow it to go up by 5 percent, so that there will be more activities in the market,” Sergio Ortiz-Luis Jr., president of Philippine Exporters Confederation Inc. (PhilExport) told reporters on March 31.

Inflation has been on an upward track this year, climbing to 2.7 percent in January and 3.3 percent in February, from 2.6 percent in December 2016, and marking its fastest pace in over two years. That was since the rate hit 3.7 percent in November 2014.

The BSP on March 28 said it expects inflation to continue rising until the third quarter of 2017 and still lead the full-year average rate into the government’s 2-percent to 4-percent target range.

Inflation in March is estimated at between 3 percent and 3.8 percent, up from 1.1 percent a year earlier.

A closer scrutiny of the monthly inflation path will show that inflation imprints will be rising until sometime [in the]third quarter of 2017, BSP Governor Amando Tetangco Jr. had said.

With this trend, the monthly inflation rates are expected to be very close to the upper band of the target range, Tetangco added.

However, Ortiz-Luis acknowledged that as a matter of policy, the BSP concerns keeping inflation always in check as its priority, making sure it stays within the 2 percent to 4 percent target range.